The financial services firm Edward Jones, which expects interest rates to rise over the long term, recently discovered that most American investors don't understand how this will affect their portfolios.
In a survey of 1,009 adults conducted at the end of July on the firm's behalf by Orc International, 63% of respondents said they didn't know how rising interest rates would affect 401(k)s, IRAs and other savings platforms.
A full 24% said they felt completely in the dark about the potential effects.
The survey found that 32% respondents between ages 18 and 34 had "no idea" how interest rate changes would affect a portfolio. Respondents' level of awareness increased with age except for the oldest age group. One-quarter of those 65 and older also said they had "no idea."
Men and women are about evenly matched (40% and 39%, respectively) when it came to understanding there would be some effect on portfolios, without quite understanding the specifics.
However, a division occurred among those who admitted they "do not understand at all" what those effects might be. While 29% of women admitted they did not understand the issue, only 19% of their male counterparts did.
Respondents in the $35,000 income bracket were most likely to misunderstand the effect of rising rates, with 35% of respondents surveyed identifying as such. Just 13% of those with household incomes of $100,000 or more indicated the same.
